My New Year’s Blog: Aristotle and The “Big Con.”

I tried to write a typical New Year’s blog but it came out so unoriginal, so puerile that I didn’t have the heart to inflict it on readers. So, I’ve done something else.

Instead, I am inflicting on readers with the time and courage to continue a blog which is not an easy read.

It is sort of like a murder mystery but before you get to the part where you discover “the butler did it” you will have to slog through a lot of turgid prose and mind-numbing statistics.

It is an effort to show how we may be fast on the way to losing our Country, it’s values, it’s comforts and opportunities, by not understanding how the Con Men & Women are taking us (and eventually themselves) to the financial and political Cleaners!

We begin with the wisdom of Aristotle, the Greek Philosopher who, among other things, taught Alexander the Great, the youngster who conquered the known world by the age of twenty six.

Benjamin Franklin, emerging from the Constitutional Convention in Philadelphia in 1787, was asked “what kind of a Government do we have?”

Franklin replied “A Republic, if you can keep it.”

Aristotle understood the difficulty of “keeping it” and forecast the progression of what I think we see around us in our Country today.

Aristotle said that “Republics decline into democracies and democracies degenerate into despotisms.” We in the United States are at a dangerous point in an effort to strengthen the middle and avoid the last.

Yes, we still have a Republic. We citizens do not have a direct vote in the making of the laws or the oversight of governmental institutions. Instead, we elect people to  do the heavy lifting and our citizen oversight is to sue in the Courts if we think they’ve done it wrong or, the stronger check, to throw out the “bums” at election time and replace them with better, smarter “law makers.”

Still, with so many people today holding our elected law makers in such contempt and believing they are
“all corrupt,”  thus sliding the Country toward a rogue citizen “democracy” of disobedience to the law and disrespect for our very system of government, we are near enough to Aristotle’s middle ground as to consider how we can prevent sliding further into the last stage, despotism.

How to strengthen Democracy, then, is the challenge.

Aristotle believed that democracy is strengthened by nurturing a strong middle class. He argued that a prosperous middle class was no threat to the wealthy because it was content with its “good life” and at the same time felt compassion for the poor and agreed with policies that helped them. Thus with a strong middle class both ends of society’s spectrum survived, the wealthy and the poor.

But when the wealthy grows too greedy, when because of their power the wealthy arrange for policies that tip the imbalance more and more in their favor, they are hurting  the poor but more importantly for the cause of a  democracy they are hurting and thus reducing the strength of the middle class.

I read an internet posting by someone named Charles which framed the consequences of reducing the middle as argued by Aristotle very well.

Charles wrote:

“Aristotle pointed out that if the middle class disappears, then the poor will become the majority…If the poor are the majority, then in a democracy they will vote to take away the money from the rich!

So, what are the rich to do?

Well, do away with democracy of course! Democracy, at that point, becomes too much of a threat to the elite, and the elite start taking steps to limit the power of government (bolding added). The elite “call the shots” by exercising their wealth; the middle class though far more numerous in numbers are overwhelmed.

Therefore, as the middle class disappears, democracy disappears with it.”

So, what do we see around us today in America?

The richest 1% of families controlled a record-high 38.6% of the country’s wealth in 2016, according to a Federal Reserve report.

That’s nearly twice as much as the bottom 90%, which has seen its slice of the pie continue to shrink.

The bottom 90% of families now hold just 22.8% of the wealth, down from about one-third in 1989 when the Fed started tracking this measure.

Which brings us to the Republican party theory of “trickle down” – Give the wealthy even more money and they will use that money to create jobs and opportunities that will enrich everyone’s life.

Well, let’s look at the record.

William Lazonick studied the record and his findings were published three years ago in the Harvard Business Review.

Here are his key points of his study:

“While the top 0.1% of income recipients—which include most of the highest-ranking corporate executives—reap almost all the income gains, good jobs keep disappearing, and new employment opportunities tend to be insecure and underpaid. Corporate profitability is not translating into widespread economic prosperity.

The allocation of corporate profits to stock buybacks deserves much of the blame.  During the period studied  companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees.

Why are such massive resources being devoted to stock repurchases? The simple truth is: Stock-based instruments make up the majority of their pay, and in the short term buybacks drive up stock prices. In 2012 the 500 highest-paid executives named in proxy statements of U.S. public companies received, on average, $30.3 million each; 42% of their compensation came from stock options and 41% from stock awards. By increasing the demand for a company’s shares, open-market buybacks automatically lift its stock price, even if only temporarily.

As a result, the very people we rely on to make investments in the productive capabilities that will increase our shared prosperity are instead devoting most of their companies’ profits to uses that will increase their own prosperity—with unsurprising results. Even when adjusted for inflation, the compensation of top U.S. executives has doubled or tripled since the first half of the 1990s, when it was already widely viewed as excessive. Meanwhile, overall U.S. economic performance has faltered.”

To be blunt. The poor and uneducated who vote for the Republican “trickle downsters”are buying one of the biggest economic “con” jobs of all times.

When today’s Republican leaders tell us that lowering the Corporate Income tax rate and reducing deductions that middle class taxpayers have relied on (and eliminating the mandate in the Affordable Care Act which will make it impossible for millions of poorer people to afford health insurance), they are the “Con Masters” and those who are taken in by them are the “rubes,” the losers.

In the new Tax bill, the middle class gets small tax cuts (which actually expire in a few years while the wealthy get a permanent huge tax cut that if history is any guide will not result in higher employment (above the normal expected) or higher wages and benefits for those employed.

Might as well just throw your life savings (and for many health) away on trying to guess which cup the pea is under at the Carnival booth.

I have cited here a couple of studies among many others I find persuasive. But, of course, you can find other studies (many funded by groups that support the wealthy’s interests) that disagree.  I invite you to go on line and read them.

But bear in mind, if these studies argue that this time “trickle down” will surely work as opposed to the last two times the Republicans tried it please remember Albert Einstein’s famous definition of Insanity: “doing the same thing over and over again and expecting a different result!”

Finally, there are many things about the New Year of 2018, that I worry about.

First, the continued ignorant and dangerous leadership of Donald J Trump.

But right behind that is the problem of the Republican “con game” I’ve described here.

If the Republicans are successful in 2018, in “reforming” (their slippery word for “cutting”) such  Government programs  as Social Security, Medicare, Food Stamps, and the like (as Speaker Ryan described as the goal), then the middle class, not just the poor, will be further pinched and reduced and the slide toward despotism that Aristotle described will accelerate.

This time, this Greek from 2,400 years ago comes bearing a gift of foresight that we should not beware of but welcome and apply.